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Chancellor Budget announced on 03/03/2021 & Tax Rates 2021/2022

Furlough scheme extended to end of September 2021 from April 2021:

The furlough scheme was due to end in April 2021 but has now been extended to end of September 2021.  Employees will continue getting 80% of salary for hours not worked, up to £2500 per month. The scheme will now close at the end of September 2021:

Up to June 2021                                         Government pays 80% of hours not worked.

July 2021           Employers pay 10%         Government pays 70% of hours not worked.

August 2021       Employers pay 20%         Government pays 60% of hours not worked.

September 2021 Employers pay 20%         Government pays 60% of hours not worked.

Employers will continue to cover national insurance and employer pension contributions as is the case now.

Self Employed grants 4 and 5:

SEISS 4th Grant               Covers period February 2021 to April 2021

Claims will open in April.              

The grant is 80% of 3 months average trading profits, capped at £7500

5th and Final SEISS Grant    Covers period May 2021 onward:                       

Claims open late July, still using 80% of 3 months average profits but now there is a turnover test:

If your turnover has fallen by 30% or more, you get full 80% of average profits grant capped at £7500.  

If your turnover has fallen by less than 30%, you will get 30% of average profits grant capped at £2850.

Those who became self-employed after 5.4.2019 can now apply for SEISS grants:

If you filed a tax return for 5.4.2020 by 2.3.2021, you can apply for the 4th and 5th grants.  This is a change from the original when you could only claim the SEISS grants if you had submitted a tax return for 5.4.2019. This means many more self employed people can now apply for the SEISS grants number 4 and 5.

Universal Credit & Working Tax Credits:

  • Uplift of £20 a week continues for a further 6 months.
  • Working tax credits additional support of a one-off payment of £500.

Minimum wages for 6.4.2021 to 5.4.2022:

Increase in national living wage                £8.91    

   Age                    Rates from April 2021

  • 23 and over          £8.91
  • 21 to 22                £8.36
  • 18 to 20                £6.56
  • Under 18              £4.62
  • Apprentice           £4.30 if under 19 or in first year of apprenticeship, otherwise refer to age  bands.

Support for rehiring staff or getting back to work:

  • Restart programme supporting long term unemployed with training.
  • Kick start scheme to help employers hire young unemployed.
  • Lifetime skills guarantee for a fully funded level 3 qualification.
  • £3000 incentive for employers, for all new apprentice hires of any age.

Business restart grants in April:

To help businesses who had to close, be able to restart the following grants are available:

Non-essential retail         up to £6000 per premises

Hospitality / leisure         up to £18000 per premises

Business Loans from April 2021 until the end of 2021:

New recovery loan scheme to replace CBILS and Bounce Back Loans.  A business of any size can apply for loans of £25000 to £10,000,000.   Government will guarantee up to 80% of the loan to lenders to incentivise lenders to approve loans.

Business Rates Cut:

Retail, hospitality, and leisure sectors will get 100% rates holiday for April 2021 to June 2021.  From July 2021 to March 2022 rates will be cut by up to 2/3rds.

5% reduced VAT rate for hospitality and tourism industry extended:

Hospitality & Tourism industry vat cut of 5% will be extended to 30th September 2021.  Vat will then be 12.5% for another 6 months from October 2021 to March 2022.  Standard vat rate returns from April 2022.

Reduced Stamp Duty Rates on Home Purchases:

  • £500000 nil rate band for stamp duty extended to 30 June 2021.
  • £250000 nil rate band from July 2021 to end of September 2021.
  • £125000 nil rate band from October 2021

5% Deposit scheme to help home buyers who have a low deposit:

Where a buyer can only afford a 5% deposit, the Government will give a mortgage guarantee to lenders to incentivise large lenders to lend mortgages to families who can only afford a 5% deposit.

Tax free allowance and tax rates for 6.4.2021 to 5.4.2022:

Rates of income tax/ national insurance/ vat to stay the same for 6.4.2021 to 5.4.2022.

Personal Allowance                         up to £12570                      0%

Basic Rate                                       £1 to £37700                      20%

Higher Rate                                     £37701 to £150000           40%

Additional Rate                                over £150000                    45%

Inheritance tax threshold             £325000 plus main residence band of £175000   

Annual Exempt amount for Capital Gains Tax       £12300

VAT registration thresholds         £85000  to April 2022


From 6.4.2022 to 5.4.2026

The tax-free personal allowance  £12570.                

                                      

Corporation tax increases from April 2023:

  • Small profits rate up to £50000   will remain at current 19%
  • Profits from £50001 to £250000 tax will be tapered up to 25%
  • Businesses can carry back losses to 3 years, to get corporation tax refunds quicker.

Tax allowance for investment in business equipment:

Super tax deduction for business investment for next 2 years, meaning if you invest in business equipment, you can reduce your tax by 130% of the cost of the investment rather than the current maximum 100%.

Example:

You spent £10000 on equipment.

You will be able to reduce your taxable profits by £13000.

Alcohol and Fuel Duty:

  • Alcohol duties frozen
  • Fuel duty frozen

Help to grow Business schools for businesses:

Management training with 90% of cost covered by Government.

Help to grow digital with free digital training and 50% discount on new productivity software.

Interested businesses should register now at www.gov.uk/helptogrow    

Where is the economy following Covid 19?

There is a projected swifter and more sustained recovery than thought in November 2020.  It is projected the economy will return to pre COVID-19 levels by the middle of 2022, 6 months earlier than previously thought.  However, in 5 years the economy will be 3% smaller than it would have been.

What are my next steps?

Make sure your staff wages are in line with minimum wage from 6.4.2021

Note the dates for applying for grants

Keep payroll advised of furloughed staff

If there is anything you need further guidance on please get in touch, we are here to help.            



 

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